People are starting to hear the phrase “digital assets” more often, but many do not know what they are. Digital assets can be anything in the digital format, but these are usually things of sentimental value (photos, social media accounts, or email accounts) or assets that have financial worth (Bitcoins or digital currency, intellectual property, reward points on credit cards or airlines, or web sites that generate income).
The Same but Different
The goals of estate planning involving digital assets are the same as any other asset, which is to pass along the asset to heirs. As with other assets, one must take inventory of what they want dispersed. The difference is that there then needs to be a password manager or list of passwords for accessing these accounts. Those with digital assets worth a large amount of money may want to consider cloud-based wallets or even small titanium metal boxes containing etched tiles designed to preserve passwords, digital keys, wallet recovery seeds, and other essential access codes.
Under federal law, possessing these passwords may not be enough for access to digital accounts. Social media accounts like email or Facebook do have settings (look in the terms of service area) so an individual can establish the name of a person who can oversee or take over the administration of an account after death.
Keeping up With Changes
The executor or trustee usually will have legal access to digital accounts upon death or incapacitation, but the wheels of the law turn much slower than the rate of change in the digital environment. This can mean that these legal representatives may not automatically have access and the asset will be lost forever, as was the case after the unexpected death of the owner of Canada’s largest cryptocurrency exchange.
It is best to work on an estate plan with a knowledgeable attorney who can help determine all foreseeable contingencies involving traditional assets as well as digital ones.